Subscribe to this blog

Subscribe by Email (get updates)

Search This Blog

Avoiding Investment Fraud

Every year thousands of people lose millions of dollars to investment fraud. One conservative estimate is that one in 10 investors will be victimized at some point in their lives, and seniors are targeted more often than younger people. The number and sophistication of investment scams is ever-growing—but by maintaining a healthy dose of skepticism and training yourself to spot some common red flags, you may be able to protect yourself and your loved ones from becoming victims.

The come-ons
Be skeptical if investment opportunities come with any of the following features:

Guaranteed high returns

Low or no risks

Invitations to join exclusive investment organizations

The ability to “get in on the ground floor”

Claims of breakthrough technologies

Penny stocks

Seminars, free meals or travel offers

The tactics
Be particularly alert to these types of strategies:

Unsolicited approaches by phone, email or text or in person

A hard sell and lofty promises

No way to call back or follow up with the seller

Insistence on a quick decision

Sketchy details

Complicated explanations or use of highly complex terminology

Emails and newsletters with unclear sources

Sidestepping scams
Here are some ways to avoid the potential of financial exploitation, should you or a loved one be approached with an unsolicited investment opportunity:

Verify credentials. Legitimate investment professionals are registered with the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC) or your state securities or insurance regulator. You can use BrokerCheck, a free online tool offered by FINRA, to review a broker’s qualifications, registration and employment history. BrokerCheck also contains a disclosure section with information about customer disputes, disciplinary events, and certain criminal and financial matters on the broker’s record.

Adopt a mindset that “there’s no such thing as easy money.” Guaranteed, assured profits with zero risk simply don’t exist; every investment involves some degree of risk.

Don’t follow the crowd. So-called affinity frauds prey upon members of a common social circle, religious group or ethnic background. If someone tells you that “everyone” is in on the deal, they may be lying—or they may have victimized a number of your peers already.

Refuse to rush to decision. Legitimate investment professionals will allow you time to conduct your due diligence. If you’re given a limited window in which to accept, walk away.

Never feel obligated. Even if you’re offered something for free, such as a meal or a seminar, you don’t owe a salesperson anything. Don’t let guilt guide your investing decisions.

Ask for documentation. Stocks, mutual funds and ETFs are typically required to have a prospectus, and bonds are required to have an offering circular. If there’s no documentation, the securities may not be registered with the SEC—which usually prevents them from being sold to the public.

Above all, remember the old axiom: If it sounds too good to be true, it probably is.

If you'd like to read an academic paper on the problem of investment fraud directed toward older Americans, you can access this publication from the Wharton School of Business: Understanding and Combating Investment Fraud,

Comments

Post a Comment

Popular posts from this blog

Climate change activists are not just interested in reducing carbon emissions in order to "save the planet." Their underlying desire is to overturn capitalism and replace it with socialist governments worldwide.

Our story starts with the IPCC, or the Intergovernmental Panel on Climate Change, a U.N. organization. "And any settlement of the Global Warming issue by the UN would entail massive transfers of wealth from the citizens of wealthy countries to the politicians and bureaucrats of the poorer countries." (1)

In 1992, at the first U.N. Earth Climate Summit in Rio de Janeiro, Brazil, Program Executive Director Maurice Strong stated, very candidly:

"We may get to the point where the only way of saving the world will be for industrialized civilization to collapse. Isn’t it our responsibility to bring this about?" (2)

Former U.S. Senator Timothy Wirth (D-CO), then representing the Clinton Administration as U.S. undersecretary of state for global issues, join…

Individual Retirement Accounts (IRAs) can be a great way to save for retirement because of the tax benefits they can provide. If you’re eligible, you can choose a traditional IRA for an up-front tax deduction and defer paying taxes until you take withdrawals in the future. Or, if eligible, you might opt for a Roth IRA and contribute after-tax money in exchange for tax-free distributions down the road.

So, what's the catch? There are a few. If you run afoul of some of the IRS rules surrounding these accounts, the penalties can be quite stiff—all the way up to a disqualification and taxation of your entire account.

Ignorance of the law is no excuse, and with few exceptions, the IRS isn’t very forgiving of mistakes. Knowing the rules can help you navigate the many potential IRA tax traps you might encounter on your way to retirement.

Keep in mind that when we discuss taxes and penalties, we’re referring to those at the federal level. In most states, you will also…

In my lifetime, I have bought six houses, and sold five. I currently live in the sixth, which was new construction, which was an adventure unlike purchasing an existing home, But the principles of buying a home are the same, whether you are purchasing a new home, or an existing home.

1. Understand why you want to buy a house
Purchasing a home is a major decision that shouldn’t be taken lightly. It’s important to define your personal and financial goals before proceeding. Think about factors such as whether you’re craving more stability, whether it makes sense financially and whether you’re prepared for the responsibility of maintaining a home.

You should explore some resources on Renting vs. Buying before you make the decision. I posted a article with a couple of good videos on this subject, and bankrate.com as an informative article here. 2. Dig Into Your Credit Reports and Credit Scores
Your credit score and history are the first things all lenders will look at to decide whether or …

Blog authors

I retired from the U.S. Air Force after 25 years, and then spent 20 years in IT management. I have a B.S. from SUNY and graduate work in communications theory at the University of Oklahoma. I also studied networking and programming at SMU. I am a graduate of the Online Trading Academy.